“Human-induced climate change is causing dangerous and widespread disruption in nature and affecting the lives of billions of people around the world, despite efforts to reduce the risks,” is how the Intergovernmental Panel on Climate Change (IPCC) summarized their findings in their latest report called “Impacts, Adaptation and Vulnerability.”
“This report is a dire warning about the consequences of inaction,” Hoesung Lee, Chair of the IPCC said in their press release about it. The report “shows that climate change is a grave and mounting threat to our wellbeing and a healthy planet,” the release says, adding that, “The world faces unavoidable multiple climate hazards over the next two decades with global warming of 1.5°C (2.7°F)…some of which will be irreversible. Risks for society will increase, including to infrastructure and low-lying coastal settlements.”
The number of $1 billion extreme weather events is increasing, costing lives, livelihoods and dollars. In 2021, there were 20 such events, and over the past five years, there have been 89, costing $764.9 billion in damages, and 4,557 lives, according to NOAA.
The IPCC implores us to make “rapid, deep cuts in greenhouse gas emissions” to combat climate change and keep the earth from warming over 1.5 degrees, where irreversible damage to our natural resources and habitat, and likely our lifestyles, will occur.
Political gridlock is keeping substantial climate policies from getting passed. But….
President Biden succeeded in getting some climate-related investments in the bills that passed this divided Congress, and announced Executive Orders to deal with a few others while Congress dithers.
Yet, Earth Day 2022 reflects a big leap forward in the efforts to combat climate change. Why?
Because the private sector took several giant steps toward reducing its massive environmental impact. Nudged on all sides – by activist investors, their kids and grandkids, consumers and the exodus of valuable talent, and then by the Securities and Exchange Commission (SEC) – the private sector stepped up much bigger since the last Earth Day than ever before.
· Investments committed: At the huge UN Climate conference known as COP26, the world’s largest asset managers announced a commitment of $130 trillion to support the transition to a net zero economy, via a new entity called the Glasgow Financial Alliance To Net Zero (GFANZ). As Gillian Tett, chair of the editorial board of the Financial Times and its former U.S. Managing Editor told me on my Electric Ladies podcast, “The GFANZ is potentially very interesting because what they’ve done is say we’ve got 450 institutions from around the world that have 130 trillion (dollars) worth of assets. All of whom are going to commit to try and decarbonize the world’s economy and to get supposedly to net zero by 2050.”
· Pandemic rethink: The pandemic forced company executives to rethink their modus operandi across every aspect of their business. From how to configure their workforce and workplaces, to raw materials, supply chains, energy sources and operations, to rethinking the products they make for us and how we get them, the constraints put on existing business models pushed companies to be more resilient and more eco-socially responsible.
· Doubling ESG investing: Environment-social-governance investing has expanded in both assets and popularity and is now mainstream. Reuters called 2021 “The Year of ESG Investing,” because $649 billion poured into ESG funds by the end of November 2021 and, during the pandemic, ESG funds outperformed non-ESG portfolios, according to BlackRock, the world’s largest asset management firm.
· The SEC takes charge: And then the SEC announced their proposed new climate
risk disclosure rules in late March 2021, which when implemented, will force companies to reveal the good, the bad and the ugly of their carbon footprint, instead of hiding behind glossy voluntary corporate responsibility reports. “The really important thing I think about this rule (from the SEC),” Dr. Julie Gorte, a veteran ESG investor, told me on my Electric Ladies Podcast, “is that if companies are going to be on the record as having a certain level of emissions, especially as climate change gets worse, there’s going to be increasing scrutiny and pressure on them to reduce those emissions,”
· Behemoths get the message: Even the oil behemoths have had their wake-up calls too. Oil giant Exxon Mobil needed to replace three board members with climate-conscious ones, and BP announced its net zero goals. Six big automakers committed to phasing out the emissions-spewing internal combustion engines as well. The Russian war against Ukraine is forcing economies to pivot to clean energy faster too.
· Talent’s demands: The pandemic-induced “Great Resignation” – or “Great Realignment” as some have called it – put talent in the driver’s seat since last Earth Day, too. Today’s talent wants to work for companies aligned with their values, and they want cold hard proof of those values and of them being practiced consistently and across the organization, forcing companies further into the ESG frame.
With all this change in corporate priorities and focus, it’s not surprising then that there was one other thing that made this Earth Day different from any other – and I don’t mean that this month Passover, which made that line famous, converged with Easter and Ramadan. There was more turnover in the C-suite itself in the first half of 2021 than ever, according to a ground-breaking study by Heidrick & Struggles, because companies decided they need a different kind of CEO now. Interestingly, the study also found that, twice as many women were made CEO than in any prior period.
We have a hard road ahead to get to a net zero economy in time to avert the catastrophe the IPCC report predicts, but Earth Day 2022 definitely reflects the private sector’s huge leap toward that goal and taking responsibility for its massive impact.